Cat Marine inks milestone LOI with Turkish tug builder

Caterpillar calls the deal “a significant milestone” that “demonstrates Sanmar’s view that Cat power solutions are not only best-in-class today, but are likely to remain so for the foreseeable future.”

The LOI covers the supply of Cat propulsion engines and generator sets to Sanmar for the shipbuilder’s newbuilding program over the coming three years.

At least 84 propulsion engines and 86 generator sets are expected to be supplied between now and 2018. These will include 26 Cat C32, 22 Cat 3512C and 36 Cat 3516C propulsion engines plus 86 Cat C4.4 generator sets.

The engines will primarily power tugboats with bollard pulls of between 60 and 85 tonnes.

Caterpillar has a long relationship with Sanmar.

“The profile of the tugboat sector is changing,” said Cem Seven, Sanmar’s Managing Director. “Consolidation means there are fewer but larger tugboat operators which are increasingly focused on bigger, more powerful vessels to meet the very best standards on sustainability. Demand is shifting to more innovative tugboats which are capable of meeting the designed bollard pull more efficiently. This is what the Cat engines help us to provide to our customers.”

Mark Harrison, Caterpillar Marine Regional Sales Manager, said: “We are delighted to have this seal of approval from one of the industry’s leaders. Our strategy is to focus of designing products to help our customers be successful. For tugs, that is high reliability at increased engine power with quicker acceleration while at the same time providing lower fuel consumption, lower emissions and increased sustainability. Cat marine engines have proven over many years to deliver this to our customers in the tug boat segment.”

Levent Altun, Group Manager at Borusan, Caterpillar’s dealer in Turkey, added: “Even with the latest design features including advanced control and monitoring systems, Cat engines are renowned for ease of operation and straight forward maintenance. Together with the company’s world-wide network providing constant customer support, Cat marine engines and after-sales services are a perfect blend of state-of-the-art technology and sound human relations.”

Sanmar now provides vessels for many of the world’s leading tug operators and recently built and commissioned a second shipyard in Turkey to handle the growing demand.

This year, Sanmar achieved delivery of 25 tugboats to owners from ten different countries, setting a new company record.

Kirby reports third quarter results

Consolidated revenues for the 2015 third quarter were $532.6 million compared with $680.7 million for the 2014 third quarter.

President and CEO David Grzebinski said the results were “largely in line with our expectations.”

“Demand across the majority of the products we carry in the inland marine transportation market remained stable with utilization in the 90% to 95% range,” he said. “Market pressure from inland tank barges shifting out of crude oil service led to continued modest pressure on contract renewal pricing. Spot prices were generally around contract price levels throughout the quarter. In the coastal marine transportation market, pricing for term contract renewals increased modestly. Our results also reflected the anticipated earnings impact from heavy coastal equipment shipyard activity.”

Mr. Grzebinski called market conditions in Kirby’s land-based diesel engine services business, as continuing to be challenging due to the decline in the price of crude oil and, consequently, the low utilization levels of the oilfield service industry pressure pumping fleet.

In the marine diesel engine services and power generation markets, results reflect continuing soft activity in the Gulf of Mexico oilfield service market, but otherwise stable levels of demand.

MARINE TRANSPORTATION

Marine transportation revenues for the 2015 third quarter were $418.3 million compared with $448.7 million for the 2014 third quarter. Operating income for the 2015 third quarter was $93.7 million compared with $112.1 million for the 2014 third quarter.

Kirby’s inland marine transportation business maintained tank barge utilization in the 90% to 95% range.

Demand for inland barge transportation of petrochemicals, refined products and black oil products, excluding crude oil, was consistent with the second quarter. Demand for barges moving crude oil and condensate during the quarter was lower both sequentially and year over year.

Operating conditions were challenging due to scheduled lock closures along the Gulf Intracoastal Waterway and high water conditions during the first part of the third quarter. Delays related to lock outages contributed to a 40% increase in delay days relative to the prior year quarter and a decline in ton miles. In addition to increased delay days, fuel prices, which were down 38% year-over-year, contributed to the year over year decline in revenue.

Demand in the coastal marine transportation market for the transportation of refined petroleum products, black oil, and petrochemicals was relatively stable, although demand for equipment for crude oil transportation declined sequentially and year over year.

Coastal fleet utilization remained in the 90% to 95% range and operating conditions were seasonally normal during the third quarter. A continued heavy shipyard schedule impacted operating results.

The marine transportation segment’s 2015 third quarter operating margin was 22.4% compared with 25.0% for the third quarter of 2014 as a result of higher labor costs, including pension, lower inland marine transportation rates, increased shipyard activity and higher depreciation expense in the coastal business, and the impact of fuel price escalators on inland marine affreightment contracts.

CASH FLOW

Kirby continued to generate strong cash flow during the 2015 first nine months with EBITDA of $437.5 million compared with $484.6 million for the 2014 first nine months. Operating cash flow was used in part to fund capital expenditures of $265.2 million for the 2015 first nine months, including $66.6 million for new inland tank barge and towboat construction, $75.2 million for progress payments on the construction of four new coastal articulated tank barge and tugboat units (“ATBs”), $3.4 million for progress payments on the construction of two 4900 horsepower coastal tugboats, $1.6 million for progress payments on the construction of a new coastal petrochemical barge and $118.4 million primarily for upgrades to existing inland and coastal fleets.

Additionally, Kirby spent $41.3 million to acquire six pressure barges in the first quarter and a total of $202.2 million on share repurchases in the first nine months of 2015.

Total debt as of September 30, 2015 was $810.4 million versus $716.7 million on December 31, 2014, and Kirby’s debt-to-capitalization ratio was 26.4%.

OUTLOOK

Mr. Grzebinski said, “Our earnings guidance range for the 2015 fourth quarter is $0.93 to $1.03 per share and we are revising our full year 2015 guidance range to $4.10 to $4.20 per share [down from the prior guidance of $4.10 to $4.35 per share]. In our inland marine transportation market, our fourth quarter outlook reflects continued modest pricing pressure. Utilization in Kirby’s inland fleet, however, is projected to remain in the 90% to 95% range. In our coastal marine transportation market, although we’ve seen some industry spot availability related to the uncertainty around crude supplies, we expect supply and demand to remain consistent with the first nine months of the year and Kirby’s fleet utilization to remain above 90%. Our guidance assumes normal fourth quarter operating conditions for both the inland and coastal marine transportation markets, including the winter cessation of most operations in Alaska.”

Mr. Grzebinski said demand is expected to remain weak in the land-based diesel engine services market and the offshore oil services portion of the marine diesel engine services market, but is expected to remain relatively stable in the marine and power generation markets.

CAPITAL SPENDING

Kirby expects 2015 capital spending to be in the $320 to $330 million range, an increase of $5 million from earlier capital spending guidance. Contributing to this is a shipbuilding contract entered into the quarter for a 35,000 barrel coastal petrochemical tank barge. The vessel will enter service under contract with an existing customer on delivery, expected in early 2017.

The capital spending guidance range includes approximately $70 million for the construction of 38 inland tank barges and three inland towboats, all expected to be delivered in 2015.The capital spending guidance range also includes approximately $100 million in progress payments on new coastal equipment, including two 185,000 barrel coastal ATBs, two 155,000 barrel coastal ATBs, two 4900 horsepower coastal tugboats and the new coastal petrochemical tank barge.The balance of $150 to $160 million is primarily for capital upgrades and improvements to existing inland and coastal marine equipment and facilities, as well as diesel engine services facilities.

Canada’s Atlantic Towing wins tidal energy support contract

Cape Sharp Tidal is a joint venture between Emera Inc. and OpenHydro, a DCNS company, which aims to deploying a fully grid connected 4MW tidal array in the Bay of Fundy in 2015. The project has the potential to be one of the world’s first multi-megawatt arrays of interconnected tidal turbines, initially providing energy to over 1,000 customers in Nova Scotia. Longer term, the project is looking towards delivering 300 MW of tidal turbine generated power to Nova Scotia in the next decade.

The Atlantic Towing contract covers the provision of specialized services including harbor and terminal towage, ocean and coastal towage, barging services, and offshore support such as anchor installation. These services, as scheduled, will employ up to 28 seafarers currently working for Atlantic Towing.

Three Atlantic Towing ASD tugs—the Atlantic Hemlock, the Atlantic Bear and the Atlantic Spruce— and the Irving Beaver Barge, will support the project in the strong Bay of Fundy ocean currents.

In addition to anchor and cable installation, the tugs will transport two 1,000-tonne tidal turbines on their journey from Pictou to the Minas Passage on a purpose-built 1,150 tonne capacity OpenHydro barge, the Scotia Tide.

Once in position, the tugs will maneuver the barge and turbine while crews lower the turbine to the seabed and connect the cables to the Nova Scotia power grid.

The subsea cables, on-shore transmission lines and power infrastructure belong to the Fundy Ocean Research Centre for Energy (FORCE) in Parrsboro.

“We’re pleased to be working with the skilled crew of Atlantic Towing on the marine operations for Cape Sharp Tidal,” said James Ives, OpenHydro’s Chief Executive. “The company shares our commitment to safety and offers real-life experience in the Bay of Fundy that will help us achieve this ground-breaking project.”

“We have safely operated in challenging sea conditions like the strong Bay of Fundy currents and tides for more than 50 years,” said Gilles Gagnon, Atlantic Towing Vice President and General Manager. “Working on the Cape Sharp Tidal project is a perfect fit for our local team’s expertise and capability.”

Other Nova Scotia companies are also providing services and expertise to the Cape Sharp Tidal project. In May, a $25-million contract was awarded to Aecon Group Inc. and naval architect firm Lengkeek Vessel Engineering. Two hundred and fifty Aecon employees are currently building and assembling the turbine components and the Scotia Tide barge in its facilities in Dartmouth and Pictou while Lengkeek, based in Dartmouth, earned the contract for barge design. In July, Chester-based Hawboldt Industries was awarded a $4.6-million contract to design and manufacture three heavy lift winches for the barge.

Jensen to design two 120 ft tugboats ordered by Kirby

The two, 120-foot long, 35-foot wide tugboats, which will be used for tow operations, will be powered by two Caterpillar 3516C, 2447 BHP at 1600 rpm main engines with Reintjes reduction gears turning two NautiCAN fixed-pitch propellers with fixed nozzles.

The vessels will also have two C7.1 Caterpillar generators for electrical service, one TESD-34 Markey tow winch, one CEW-60 Markey electric capstan and one Smith Berger Town Pin.

“Jensen is proud to have been chosen as the design firm on this project and looks forward to seeing the vessels through from concept to completion,” said Johan Sperling, vice president, Jensen Maritime. “We will embed a full-time Jensen designer in the shipyard for the duration of this project to help with system design and to ensure that the tugboats are built to exacting specifications.”

Keels will be laid for both vessels this fall with complete vessel delivery scheduled for May and November 2017. Both vessels will be fully classed by ABS and compliant with U.S. Coast Guard, as required, at delivery.

The Shearer Group adds to its team

 

Mr. Brann graduated with a bachelor’s degree in naval architecture and marine engineering from Virginia Polytechnic Institute and State University in 2011. He has a wide range of knowledge of marine engineering specialties including ship stability, damage analysis, systems integration, ship survivability, and firefighting systems.

Previously, Mr. Brann has worked for the American Bureau of Shipping (ABS) in its ship engineering department analyzing stability calculations for engineering firms, shipyards, and vessel owners.

Before joining ABS, he worked at ICI Services Corporation as an associate naval architect working on systems design and integration for various marine projects.

Mr. Brann is a member of SNAME and an Engineer in Training in Virginia. He plans on sitting for the Professional Engineer examination in the spring of 2016.

Judge suspends operator’s merchant mariner credential

On Feb. 17, 2015, Ms. Stahl wrongfully assumed direction and control of the towing vessel Shannon in Elliot Bay with an invalid credential in violation of U.S. laws and regulations.

 Ms. Stahl’s credential was suspended at the time as a result of a previous violation during which she endangered the crew and passengers aboard multiple Washington State ferries by purposely hindering their safe transit in Elliot Bay near Seattle on Oct. 7, 2014.

Ms. Stahl had also previously been issued a Letter of Warning by the Coast Guard in March 2013 and had her credential suspended for three months in September 2013, both for other violations of U.S. laws and regulations.  

“The Coast Guard’s enforcement actions regarding mariner credentials are remedial and not penal in nature and are designed to maintain standards of competence and conduct necessary to minimize loss of life, personal injury, property damage, and environment harm on U.S. waters,” said Chief Warrant Officer Brian Hennessy, senior investigator at Coast Guard Sector Puget Sound. “When repeat offenses warrant more significant action, the Coast Guard will not hesitate to seek lengthy suspension or revocation of a mariner’s credentials.”

 

Harley newbuild will be first with Cat marine Tier 4 engines

 

When Harley Marine decided to build the new line haul boat, the Earl W. Redd, for towing up and down the U.S. Pacific Coast, the company wanted a proven power platform that would meet the new emissions requirements.

Over the years, Harley Marine has successfully operated line haul tugs powered by Cat 3500 Tier 1 and Tier 2 propulsion engines. Cat dealer Peterson Power suggested two 3516E engines —a flexible power solution that addressed both Harley Marine’s need for power and the upcoming Tier 4 regulations.

To meet the Tier 4 Final emissions standards coming in 2016, each of the two continuous duty 3516E engines—individually rated with a 10% horsepower increase of 2,682 hp at 1,600 rpm—is paired with a selective catalytic reduction (SCR) aftertreatment system, using DEF (diesel exhaust fluid) a urea-based solution, to reduce NOx emissions in the exhaust.

“Harley Marine should save over $1 million across a 15-year lifecycle on total fluid consumption (diesel plus DEF) costs for this newbuild compared to an equivalent Tier 2 powered vessel. They are able to deliver an increased level of performance due to the higher power rating with increased efficiency,” says Ryan Darnell of Caterpillar’s Large Power Systems division. “That’s a direct result of engine fuel efficiency improvements that our SCR technology allows us to make by reducing NOx downstream of the engine combustion process.”

Harley Marine has a long-standing relationship with Caterpillar Marine, including parts and service support from dealers across the United States.  In addition, Cat Financial has provided construction and ownership financing for multiple Harley Marine vessels— including the Earl W. Redd.

“Harley Marine appreciates that they can get the whole package from one source,” says Brent Nelson, a Caterpillar Marine territory sales manager who works closely with Harley Marine. “Caterpillar Marine is able to bring together multiple parties to make sure the design and installation is exactly what they need.”

For this particular vessel, that includes not just Harley Marine, but also Diversified Marine, Peterson Power, the naval architect and Cat engineers back at the factory. Caterpillar says that everything is now on track for the Cat engines to be delivered to the shipyard in April 2016, with vessel construction complete in October of that year.

Are you ready for a TOWBoT?

 

Drone technology is also finding applications in the maritime industry for the same reasons.

“We see opportunities to use robotics to reduce the danger to crews posed by riskier tug operations, and to reduce costs in some cases,” says Mike Fitzpatrick, President & CEO of Vancouver-based naval architectural firm Robert Allan Ltd. “Control and digital communication technologies developed for drones used in other sectors have reached the point where its transfer to our industry is completely feasible, and is perhaps overdue. These technologies have been used in smaller autonomous surface vessels (ASVs), autonomous mine trucks, autonomous underwater vehicles (AUVs) and aerial drones for years.”

Robert Allan Ltd. (RAL) has just unveiled an autonomous tug concept called the RAmora. The first in the company’s TOWBoT (Tele-Operated Workboat or Tug) series, the RAmora 2400 is a versatile towing platform designed primarily for ship assist and berthing operations. With a bollard pull of 55 tonnes, the RAmora 2400 features a hybrid propulsion system and ample battery storage capacity to enable extended operation even in potentially hazardous environments such as LNG terminals or fire-fighting situations.

The RAmora is operated remotely by a captain on a command tug using a console equipped with live video and other positioning information.  “It is also possible,” explains Fitzpatrick, “for the RAmora captain to operate RAmora away from the console by a bellypack controller when in close visual range.”

The control system design was developed in partnership with International Submarine Engineering of Port Coquitlam, Canada, and is derived from proven remotely operated vehicle, autonomous underwater vehicle and surface vessel applications.

 

RAmora is fitted with Voith Schneider Propeller (VSP) drives arranged in a fore/aft configuration and its hull form, designed for high stability and good seakeeping performance in waves, is the product of extensive development work including CFD and towing tank testing. Yet, being a TOWBoT with no need for a conventional wheelhouse, crew accommodations, domestic systems or lifesaving equipment, RAmora is simpler and more compact than any conventional tug of comparable performance.

 

Other features incorporated into the RAmora include off-ship fire-fighting (fi-fi) capability classed to “Fi-Fi 1”, two 1,200 m³/hr fire monitors supplied by electrically-driven fire-fighting pumps, a crane boom that can be optionally fitted with a smaller 600 m³/hr fire monitor and camera.

RAmora can be used for ship handling operations that can put crew at risk, for operations at terminals where ship handling may be required in emergency  situations in hazardous environments, or as a fire fighting asset that can work in close proximity to a toxic fire, or in a restricted space, for extended periods with no risk to crews.

But don’t expect the RAmora to appear in the market overnight. “While the core control and communication technologies are mature,” cautions Fitzpatrick, “there is a lot of work to be done to get to the point where industry, class and regulatory authorities are completely satisfied that safety and reliability meet or exceed what is presently achieved with conventional tugs for the type of ship handling operations that RAmora is intended for. That process could take several years, and we need to be realistic about that. On the other hand, building a prototype RAmora could be done in as little as one to two years since there are no major technological obstacles. We see it as more of an exercise in integrating existing technologies. In many respects, without the normal outfitting required for a crewed tug, RAmora is simpler to build and has considerably fewer systems.”

Harley Marine strengthens management team

“The expansion of our management team reflects the accelerated pace of growth across the organization,” says Harley Marine Services CEO Harley Franco. “Don and Steve represent our ongoing commitment to our customers, employees, and investors to ensure Harley Marine’s recent and projected growth is supported by a team of seasoned executives. We expect to do big things in the coming years and we’re building a world class team to support those activities.”

Prior to joining Harley Marine Services (HMS),Martin (shown at right) was the Vice President and General Counsel formartin Delta Western and Hawaii Petroleum, where he oversaw all aspects of safety, risk management and regulatory compliance for the fuel distribution companies. Previously, he served as the Director of U.S.-flag shipping for ConocoPhillips and held positions with Crowley Maritime Corporation, Exxon Shipping Company, and Olympic Tug & Barge, a subsidiary of HMS. He has a combination of hands-on marine experience including positions from Second Officer through Captain and commercial and legal experience in shore side senior management positions. He attended the University of Washington, California Maritime Academy, and holds a Juris Doctorate degree from the University of the Puget Sound.

Carlson joins HMS from Alaska Marine Lines (AML), where he served as General Manager of Marine Engineering. Prior to joining AML, he was with with Kvichak Marine and the U.S. Coast Guard. Carlson SCarlsonretired from the Coast Guard at the rank of Captain, after 24 years of service, with his last assignment being Chief of the Office of Naval Engineering where he oversaw engineering and logistics support to the entire Coast Guard fleet of over 230 ships and 1,500 boats.  He has advanced degrees in Mechanical Engineering, Marine Engineering and Naval Architecture from the University of Michigan, an executive development program certificate from the University of Washington, and a bachelor’s degree from the U.S. Coast Guard Academy. He is also a licensed Professional Engineer in the State of Washington.

 

ITF has concerns on tug operations in new Panama Canal

Though cracks and seepage in the new locks have been in the news, structure is not the only concern. The new locks will necessitate changes to canal operations.

The Panama Canal Authority has taken delivery of a fleet of new tractor tugs assist post-Panamax-size vessels that will be transit through the new locks. Locomotives currently assist ships through the existing locks.

What seems to be at issue, is how the tugboats will be used.

Ivan de la Guardia, general secretary of Panama’s Tugboats Masters and Mates Union, said: “We have, for several months, asked to have a proper engagement to draft a new set of procedures for the new locks. This has constantly being denied by the canal administrator. Even members of parliament have pointed out that the tugboat fleet has serious deficiencies that have to be addressed.”

Luis Yau, general secretary of the Panama Engineers’ Union added: “Even if the locks were ready today, one year after the original scheduled delivery, we would not be ready to operate safely and efficiently. We want the Panama Canal Authority to understand that our lives are at stake if we lack the proper operational procedures.”

Last week, the ITF hired Brazil-based Fundação Homem de Mar (FHM), which is associated with Merchant Marine Officers union SINDMAR, to construct a mathematical model to analyze the maneuverability considerations for the safe transit of the locks.

“We have developed a series of services in our simulation center, we are capable of making mathematical models of all kind of vessels, terminals and navigational channels in order to simulate the maneuverability and the feasibility of all maritime operations,”said Severino Almeida, a council member of the FHM foundation. “We have decided to offer our solidarity and expertise to support our Panamanian colleagues and the ITF. The Panama Canal has a special meaning for all of us as seafarers and we are eager to support a better understanding of the operation of the new locks.”

“The ITF is committed to using all means, including the most advanced mathematical models, in order to ensure that operations are safe for the tugboat crews and for all canal users,” said ITF president Paddy Crumlin. “Any inadequate operation could have a serious impact on the international maritime trade and also on the seafarers we represent.”

He concluded: “We want to support the Panamanian authorities and the international maritime community to make the new locks a success, both in terms of safety for seafarers and Panama Canal workers, but also in terms of profitability for the Panamanian government, which has made an incredible investment.”

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